Whether you work at a financial institution, develop real estate, invest in property, or act as a broker, there’s a common thread that binds all facets of the real estate world together. It’s highly likely that you have one or more financial products like a credit card, debit card, deposit account, car loan, commercial real estate loan, and/or checking account. Sometimes one or more of these …
Commercial Real Estate Blog
Introduction to Lease vs. Own Commercial Real Estate Analysis
Imagine you are a mid-level manager at a fast growing small business. As part of the company's expansion plans, you have been tasked with finding office space in a new city and deciding whether to lease it or purchase it. Fortunately, there is an objective way to make this decision. But, it can be a little bit complicated. In this article, we are going to …
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Understanding a Commercial Real Estate Rent Roll
When real estate investors are evaluating a potential rental property purchase or a bank is underwriting a potential loan, one of the first documents that they will ask for is the property's “rent roll” or "rent roll report." In this article, the rent roll document is described in detail and its utility in the CRE due diligence process is highlighted. Let's start …
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Three Types of Commercial Real Estate Obsolescence
One of the unique challenges of commercial real estate investment is that markets, types of property, return expectations, and physical environments are in a constant state of change. As a result of these changes, a commercial property could be cash flow positive one day and undesirable the next due to shifts in tenant desires or some other factor. The real estate term for this type of …
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Understanding the Personal Financial Statement
More often than not, some portion of every commercial real estate transaction is financed with debt. Typically, that debt comes from a bank or non-bank lender who agrees to lend a certain amount of money in return for certain concessions from a borrower. For example, they will almost always require a 1st position mortgage on the property securing the loan and could require the borrower to agree …
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Introduction to Comparative Lease Analysis
Suppose that a medium sized accounting firm is looking to expand its footprint by leasing office space in a new city. After touring several spaces, they have narrowed it down to two options. The options have similar rental rates, but the firm wants to conserve capital so they need to figure out which one is less expensive. To solve this problem, they need to identify and analyze all of the …
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Understanding the Co-Tenancy Clause
A typical retail shopping center or mall works under a tried and true business plan. The owner and/or developer of the property works first to attract one or more “anchor” tenants and then surrounds them with a variety of smaller tenants who benefit from the traffic they create. Together, the anchor and their supporting tenants form a mutually beneficial “ecosystem” that works to deliver a …